Civic Capital and the Vertical Integration of Service Provision: Evidence from Italy

Matthias Buerker and Gaetano Alfredo Minerva
Authors registered in the RePEc Author Service: Matthias Bürker

ERSA conference papers from European Regional Science Association

Abstract: This paper studies whether civic capital acts an effective restraint against opportunistic behavior in transactions, looking at the degree of outsourcing to external suppliers of service provision in Italian firms. Our results show that, on average, firms tend to outsource more services where civic capital is higher. Two qualifications apply: the firms that are more heavily influenced are the smaller ones; the effect is particularly pronounced in provinces where formal contract enforcement is more difficult. To address the issue of endogeneity we also instrument the current stock of civic capital by historical variables. We argue that the rise in the propensity to engage in transactions with outside service suppliers is evidence of a decrease in the opportunistic behavior between the parties involved in the transaction.

JEL-codes: A13 L20 Z13 (search for similar items in EconPapers)
Date: 2013-11
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https://www-sre.wu.ac.at/ersa/ersaconfs/ersa13/ERSA2013_paper_01209.pdf (application/pdf)

Related works:
Working Paper: Civic capital and the Vertical Integration of Service Provision: Evidence from Italy (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:wiw:wiwrsa:ersa13p1209

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